Vueling A320. Courtesy photo

Barcelona-based Vueling Airlines (VY) reported a first-quarter net loss of €16.3 million ($21 million), an improvement of 28.7% from €23.6 million in the same period last year (ATW Daily News, May 6, 2011). Revenue was up 32.5% to €168.5 million compared to €126.2 million in the year-ago period. The airline carried 2.6 million passengers, 24% more than the year-ago quarter.

In a statement, the company attributed the positive performance to “consolidation in the main markets in which VY operates,” and an “improvement in unit revenues together with a greater capacity operated compared with last year.”

Costs continue to affect profitability, with a 38.4% increase in fuel costs accounting for the lion’s share. The airline said this increase “has had a significant effect on VY’s cost base, although the hedging policy … has helped to soften this price increase.” Unit fuel costs per ASK rose 22.1% year-over-year.

Overall, costs rose 20.3% to €195.3 million from €162.4 million in the year-ago quarter. Non-fuel costs were up 14.1%, largely due to a 12.2% increase in the number of flights operated.

In line with VY’s expansion plans, the carrier’s fleet will increase to 59 by the third quarter, increasing capacity from between 20% and 25%; the airline expects to operate 53 new routes this summer. Flights to Italy will increase 22%, to France, 44%, and to Russia, 65%.

The airline has signed an interline agreement with British Airways, giving it access to an extensive network of connections through London Heathrow, and growing its business passenger services.

VY warns that high oil prices and weak domestic demand—combined with a proposed increase in passenger airport taxes at Spain’s airports—could have a negative impact on demand.

The carrier has increased its net cash to €277.9 million as of March 31, up €31.3 million from year end 2011, which means the company is still operating without financial debt.

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